Arrests in GoFundMe homeless 'scam' show perils of crowdfunding

By Dareh Gregorian with NBC News U.S. News&bullet;
last updated:
16/11/2018

They've been used to help cancer victims, people in danger of losing their homes, businesses trying to stay afloat and communities trying to rebuild.

And now internet crowdfunding sites are increasingly being used by scam artists trying to con well-meaning people out of their hard-earned money.

Charges Thursday against a New Jersey couple and a homeless man whose ostensibly heartwarming encounter led to a $400,000 haul on GoFundMe show how hard it can be to differentiate real people in need from those motivated by greed.

The case against the trio "is crazy," said Adrienne Gonzalez, founder of the watchdog website GoFraudMe, and it highlights the risks of giving to crowdfunding sites.

Stephanie Kalivas, an analyst for Charity Watch in Chicago, called the case, "a perfect example of the inherent risks and weaknesses of giving over a crowdfunding site.

"The couple, Mark D'Amico, 39, and Kate McClure, 28, melted hearts across the country when they described an encounter McClure had with a homeless Marine veteran named Johnny Bobbitt, Jr. 35.

McClure said she had run out of gas near the interstate in Philadelphia, and that Bobbitt trudged to a service station and spent his last $20 so she could make her way home.

The couple launched a GoFundMe campaign last November entitled "Paying It Forward," looking to raise $10,000 to rent Bobbitt an apartment and a car.

Their plea went viral, and within a month, more than14,000 people had donated a total of $402,706 to the cause.

But the "entire campaign was predicated on a lie," Burlington County prosecutor Scott Coffina said Thursday.

Burlington County Prosecutor Scott Coffina speaks during a news conference in Mt. Holly, New Jersey on Nov. 15, 2018.Seth Wenig

The scheme fell apart after Bobbitt, and his lawyers, complained publicly that the couple was hoarding the money, and that he'd only received $75,000 from the fundraising haul. Lawyers for the couple said they were withholding money because they were concerned Bobbitt would spend it on drugs.

In reality, prosecutors say, the money was gone because D'Amico and McClure had spent and gambled the cash away within months. Investigators then discovered their tale of Bobbitt's heroism was a fantasy — designed to garner 15 minutes of fame and tug on the public's sympathies.

The trio came close to getting away with it, too — police only started investigating after Bobbitt complained about not getting his cut, Coffina noted.

A spokesman for GoFundMe, Bobby Withorne, said in a statement that, "While this type of behaviour by an individual is extremely rare, it's unacceptable and clearly it has consequences. Committing fraud, whether it takes place on or offline is against the law.

"He said the company is completely repaying all of the donors to the "Paying It Forward" campaign.

The company estimates that campaigns with "misuse" of its platform "make up less than one tenth of one percent of all campaigns."

But charity watchdogs are skeptical of that figure, and said the New Jersey case shows how easy it is to game the system.

D'Amico and McClure posted numerous phony updates on their petition in a bid to increase donations, court papers say.

"There's no accountability on the back-end," Kalivas said. "[Fundraisers] don't have any responsibility to report back and give proof they spent the money the way they said they were going to use it."

And many donors practice "drive-by activism," said GoFraudMe's Gonzalez. "We give five dollars, move on and forget about it."

In the Bobbitt case, donors could have used more reflection.

"Let's say everything had worked out the way it seemed in this case. The people who started this fund aren't drug counselors, and you can't just throw money" at someone with a drug problem, she said.

"People need to think when they're giving."Kalivas agreed, noting "there are plenty of legitimate charities to help homeless people and homeless veterans."

GoFundMe does offer protections for duped donors — they can be repaid for donations of up to $1,000 if a campaign is found to be fraudulent — and has helped raise billions of dollars for people in need since its launch in 2010.

While the company has become more proactive looking for fraud — it shut down several suspicious campaigns that popped up soon after the school shooting in Parkland, Florida, earlier this year — it still mainly relies on users to point out suspicious activity.

And while the platform will work with law-enforcement probing fraudulent campaigns, the most the company will do on its own is shutter a campaign, Gonzalez said."They're not contacting police and initiating investigations. That's up to the users to do," she said.

Meanwhile, law-enforcement has gotten more aggressive in prosecuting crowdfunding cons."When I started doing this in 2016, there were very few prosecutions," Gonzalez said. Some police departments seemed to initially think of such cases as complicated computer crimes, but have come to realize "that fraud is fraud and you don't need new laws," she said.

Kalivas recommended people give causes via a registered 501(c)3 charity because of the greater transparency, and said people should try only giving to a crowdfunding site if they know the people involved in the particular campaign.

Experts have also recommended researching a campaign's manager or a fund organizer to look for any red flags.

Gonzalez said the most prevalent scams she's seen involve people faking illness."All it does is hurt people who need help," she said.